Final Tax Regime and Minimum Tax Chapter- 22
PRACTICE QUESTIONS FOR CA MOD F AND ICMA STUDENTS
You are provided with the following data of financial results of some taxpayers relevant to the tax year 202 2
in order to compute tax liability:
- Company 1 achieved the turnover of Rs. 300 million during the year. Taxable income was computed
at Rs. 2,000,000. The taxable income of the company includes interest income amounting to Rs.
500,000. - Company 2 although achieved the gross sales volume of Rs. 400 million, however, this year the
company could not achieve profits and fetch losses to the tune of Rs. 20 million. It is worth mentioning
that the products of the company are subject to levy of sales tax and excise duty. During the year, the
company charges sales tax amounting to Rs. 45 million after allowing a discount of Rs. 30 million.
Whereas the company has paid excise duty amounting to Rs. 20 million on the production of excisable
goods. - Company 3 is a non-resident company and the company also suffered losses aggregating to Rs. 40
million as compared to sales of 3 billion. - Company 4 is engaged in the supply of goods and execution of contracts. During the year, the
company only executed contract in FATA and due to non existence of banking system in FATA, all
these sums are received in cash to the company. Total contract receipts are Rs. 400 million. Total
turnover of supplies made in Pakistan aggregates to Rs.200 million. Whereas aggregate overall profit
of the company is Rs. 7 million. It is worth mentioning that the company assessed carry forward losses
for the last six years aggregates to Rs. 9 million. The company paid commission to its dealers
amounting to Rs. 7 million. - Company 5 is incorporated in July, 201 6. Total paid up capital of the company is Rs. 20 million and
during the year, the company achieved a sales volume of Rs. 200 million. The company earned a profit
of Rs. 1,800,000 during its first year of operation. - Company 6 is incorporated in September, 201 6. Total paid up capital of the company is Rs. 15 million
and during the year, the company achieved a sales volume of Rs. 200 million. The company has gross
loss before depreciation and inadmissible expenses Rs. 5 million during its first year of operation.
Compute the tax liability of the aforesaid taxpayer for the tax year 2021.
Solution:Computation of
tax liability:
1 2 3 4 5 6
A. Under minimum tax: Rs. Rs. Rs. Rs. Rs. Rs.
Gross turnover 300,000,000 400,000,000 3,000,000,000 600,000,000 200,000,000 200,000,000
Less: sales tax - 45,000,000 - - - -
Less: discount - 30,000,000 - - - -
Net turnover 300,000,000 325,000,000 3,000,000,0 00 600,000,000 200,000,000 200,000,000
Tax on turnover @ 1 .25% 3 , 750 ,000 4 , 062 , 500 - 7 , 5 00,000 2 , 5 00,000 -
B. Under Normal tax:
Taxable income 2,000,000 (20,000,000) (40,000,000) 7,000,000 1,800,000 (5,000,000)
Carry forward of losses - - (9,000,000) - -
Income 2,000,000 (20,000,000) (40,000,000) (2,000,000) 1,800,000 (5,000,000)
Tax @ 29 % 580 ,000 - - - 522 ,000 -
(2 1 % for small company)
Tax liability
(Higher of A or B) 3 , 75 0,000 4 , 062 , 500 - 7 , 5 00,000 2 , 5 00,000 -
Definition of company includes the following:
Banking company, public company, private company, co-operative society, finance society, assets
management company, financial institutions, HBFC, investment company, leasing company, mutual fund,
non-banking finance company, venture capital company, real estate investment trust scheme and real
estate investment trust management company.